A company purchased two machines to mill silver plates. A smaller machine has a setup cost of 600 pesos and a unit cost of 3 pesos for each plate manufactured A bigger machine has a setup cost of 800 pesos but a unit cost of only 2 pesos for each plate manufactured. Find the break-even point.
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- The ore of a copper mine in Visayas contains, 0.7 grams of copper per ton. First method of processing costs Php 1,050 per ton and recovers 94% of the copper, while another method costs only Php 900 per ton and recovers 80% of the copper. If copper can be sold at Php 10 per gram. a) how much is the net profit using the first method? b) which method is better?Selma Corporation uses Part PB7 in one of its products. The company's Accounting Department reports the following costs to produce 7,000 units of the PB7 that are needed every year. An outside supplier has offered to make the part and sell it to the company for RM28.30 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only RM9,000 of these allocated general overhead costs would be avoided. Should Selma Corporation buy PB7 from the supplier or continue producing the part internally? Shows the effect on the company's total net operating income by comparing both alternatives.Jonfran Company manufactures three different models of paper shredders including the waste container, which serves as the base. While the shredder heads are different for all three models, the waste container is the same. The number of waste containers that Jonfran will need during the following years is estimated as follows: The equipment used to manufacture the waste container must be replaced because it is broken and cannot be repaired. The new equipment would have a purchase price of 945,000 with terms of 2/10, n/30; the companys policy is to take all purchase discounts. The freight on the equipment would be 11,000, and installation costs would total 22,900. The equipment would be purchased in December 20x4 and placed into service on January 1, 20x5. It would have a five-year economic life and would be treated as three-year property under MACRS. This equipment is expected to have a salvage value of 12,000 at the end of its economic life in 20x9. The new equipment would be more efficient than the old equipment, resulting in a 25 percent reduction in both direct materials and variable overhead. The savings in direct materials would result in an additional one-time decrease in working capital requirements of 2,500, resulting from a reduction in direct material inventories. This working capital reduction would be recognized at the time of equipment acquisition. The old equipment is fully depreciated and is not included in the fixed overhead. The old equipment from the plant can be sold for a salvage amount of 1,500. Rather than replace the equipment, one of Jonfrans production managers has suggested that the waste containers be purchased. One supplier has quoted a price of 27 per container. This price is 8 less than Jonfrans current manufacturing cost, which is as follows: Jonfran uses a plantwide fixed overhead rate in its operations. If the waste containers are purchased outside, the salary and benefits of one supervisor, included in fixed overhead at 45,000, would be eliminated. There would be no other changes in the other cash and noncash items included in fixed overhead except depreciation on the new equipment. Jonfran is subject to a 40 percent tax rate. Management assumes that all cash flows occur at the end of the year and uses a 12 percent after-tax discount rate. Required: 1. Prepare a schedule of cash flows for the make alternative. Calculate the NPV of the make alternative. 2. Prepare a schedule of cash flows for the buy alternative. Calculate the NPV of the buy alternative. 3. Which should Jonfran domake or buy the containers? What qualitative factors should be considered? (CMA adapted)
- FLY corporation manufactures stamp pad that sells for Php 65.00 each. It costs FLY corporation Php 35,000.00 per year to operate its plant. The sum includes rent, depreciation charges on equipment, and salary payments. If the cost to produce one stamp pad is Php 50.00, how many stamp pad must be sold each year for FLY to avoid taking a lossBT&T Corporation manufactures telephones. Recently , the company produced a batch of 600 defective telephones at a cost of $9,000. BT &T can sell these telephones as scrap for $9 each. It can also rework the entire batch at a cost of $6,500 , after which the telephones could be sold for $20 per unit. If BT&T reworks the defective telephones , by how much will its operating income change ?The Lombard Company produces and sells office-space dehumidifiers to companies that own or rent office space. (a) Lombard’s materials and labor costs for producing the dehumidifiers are $3,000 per unit and the fixed costs of its dehumidifier production plant are $1.85 million. If Lombard sells a dehumidifier for $5,000 per unit, what is its percent contribution margin? Show your work. (b) If Lombard used revenue-based compensation to pay its sales force, what would be a salesperson’s sales credit for selling 20 dehumidifiers at a price of $4,500? Show your work. (c) If Lombard used the profit-based compensation method described in the course to pay its sales force and sets the dehumidifier’s target price at $5,000 per unit, what would be a salesperson’s sales credit for selling 20 dehumidifiers at a price of $4,500? Show your work. (d) Explain the benefit to Lombard’s management of using the profit-based compensation method of Part (c) over revenue-based compensation for…
- Three machines are employed in an isolated area. They each produce 2000 units of output per month, the first requiring $20,000 in raw materials, the 2nd $25,000, and the 3rd $28,000. What would you expect to be the monthly charge for the first and second machines if the services of the third machine can be hired at a price of $9000 per month? Which parts of the charges for the first two machines are economic rent?The annual maintenance cost of a machine shop is P69, 994. If the cost of making a forging is P56 per unit and its selling price is P135 per forge unit, find the number of units to be forged to break-even. If the number of units sold is 1000, what is the loss/profit?The ML Company imported a new machine at a peso equivalent of $1,320,000. The company has to pay additional cost of importing the asset such as $40,000 import duties and $60,000 non-refundable purchase taxes. Costs of transporting the asset was $20,000 and cost of preparing the asset for its intended use include $12,000 installation and $8,000 testing and trial run costs. How much is the initial cost of the new machine?
- Rosario Company, which is located in Buenos Aires, Argentina, manufactures a component used in farm machinery. The firm’s fixed costs are 4,000,000 p per year. The variable cost of each component is 2,000 p, and the components are sold for 3,000 p each. The company sold 5,000 components during the prior year. ( p denotes the peso, Argentina’s national currency. Several countries use the peso as their monetary unit. On the day this exercise was written, Argentina’s peso was worth .104 U.S. dollar. In the following requirements, ignore income taxes.)Required: Answer requirements (1) through (4) independently.1. Compute the break-even point in units.2. What will the new break-even point be if fixed costs increase by 10 percent?3. What was the company’s net income for the prior year?4. The sales manager believes that a reduction in the sales price to 2,500 p will result in orders for 1,200 more components each year. What will the break-even point be if the price is changed?5. Should the…The Kimchi Company imported a new machine at a peso equivalent of P1,320,000. The company has to pay additional cost of importing the asset such as P40,000 import duties and P60,000 non-refundable purchase taxes. Costs of transporting the asset was P20,000 and cost of preparing the asset for its intended use include P12,000 installation and P8,000 testing and trial run costs. How much is the initial cost of the new machine?Required to answer. Single choice.The Kimchi Company imported a new machine at a peso equivalent of P1,320,000. The company has to pay additional cost of importing the asset such as P40,000 import duties and P60,000 non-refundable purchase taxes. Costs of transporting the asset was P20,000 and cost of preparing the asset for its intended use include P12,000 installation and P8,000 testing and trial run costs. How much is the initial cost of the new machine?